The Civil War's effect on Northern industry was
uneven, ambiguous, even Contradictory. A wealth of economic data
offers evidence that the industrial capacity of the North was
greatly expanded by the conflict. Other statistical information,
equally abundant, suggests that the war exercised no major
influence on Northern industry or actually retarded its growth.
One major economic result of the war was that it helped
change the U.S. from a country with an essentially agrarian
society to one dependent on mechanization and a national market
system. Only the North possessed an industrial base, small as it
was, before the shooting started. During the fiscal year ending 1
June 1860, the country possessed some 128,300 industrial
establishments. Of these, 110,274 were located in states that
remained in the Union. The most heavily industrialized states,
New York and Pennsylvania, each had more industry than all the
seceding states combined. In 1860, too, America had a total of
$1,050,000,000 invested in real and personal property devoted to
business, with $949,335,000 concentrated in the North;
Pennsylvania, New York, and Massachusetts each had a larger
investment than the South as a whole. Finally, the North
contributed 92.5% of the $1.9 billion that comprised the total
value of annual product in the country in 1860.
One body of evidence indicates that the war widened this
sectional disparity by destroying the South's minute industrial
base and expanding that of the North to prodigious dimensions.
Statistics on specific industries provide what appears to be
convincing proof. While the loss of the Southern crop produced a
steep war-long decline in production in the North's largest
industry, cotton textiles, its woolen industry enjoyed a 100%
production rise during the conflict. The second largest consumer
industry in the Union, shoes and leather, also enjoyed tremendous
growth, thanks to army contracts that more than offset the loss
of the Southern market. Other war related industries, especially
firearms, gunpowder, and wagon manufacturing, grew rapidly on the
strength of military contracts. Meanwhile, iron production in the
North experienced a slump early in the war but boomed 1863-64, in
the latter year reaching a production level 29% higher than that
of the entire country in the busiest prewar year, 1856. The coal
industry experienced similar growth, in 1861-65 enjoying an
expansion rate 21% higher than that for the nation as a whole
during the 4 years immediately preceding civil strife.
The war years stimulated production of new inventions and
accelerated the growth of established technology. Due to a deluge
of government contracts, sewing machines became an integral part
of the clothing industry, and the 50-year-old system of machine-made interchangeable parts became firmly entrenched in the
production system. Agriculture-related industrial goods also
witnessed production spurts attributable to the war: Gail
Bordens condensed-milk process, patented in 1856, became
essential to the diets of many Union soldiers, while implements
including the thresher and the rotary plow experienced sales
booms as machinery took over work abandoned by farm hands gone to
war. In other ways, such as by easing unemployment and by
promoting the enactment of protective tariffs, the war encouraged
wide-scale industrial expansion. No wonder that by 1864 the
Unions manufacturing index had risen to a level 13% greater than
that of the country as a whole in 1860.
But the war gave rise to no important new industries and,
despite the statistics quoted above, generated no unusual
increase in basic industrial production. It did not, as some
economists later asserted, spawn an American industrial
revolution; most of the innovations that did revolutionize
American industry later in the century originated in the period
1820-60. Sharp declines marked the production expansion of many
Northern industries during wartime. The nations railroads, for
example, increased their trackage by 70% during the 1860s, as
against over 200% in a brief period prior to the 1860s. The war
saw only a 10% rise in the production of pig iron, though that
industry had experienced a 17% increase 1855-60 and in the 5
years following Appomattox grew by 100%. Though the coal industry
as a whole expanded, bituminous coal production failed to
increase during the conflict, while the copper industrys rate of
growth was dramatically low, especially given its importance to
war materiel production. Perhaps a more revealing ratio is the
22% increase in total American commodity output in the 1860s,
compared to a 62% growth rate in both the 1850s and 1870s.
Another striking comparison is the 3% decline in American output
per capita in the 1860s, as against an average decennial increase
of 20% for the balance of the period 1840-1900.
The war may also have exerted a negative influence on
Northern industry in more generalized ways. The state of the
wartime economy, which inspired the issuance of paper currency
throughout the Union, produced a steady inflation, a general rise
in commodity prices, and a decrease in purchasing power. It also
gave rise to trade unions, work strikes, and other conditions
considered injurious to industrial growth. By discouraging
immigration, the war reduced a source of cheap labor. The
conflict also helped unsettle business conditions by drawing off
capital and labor from North and South alike, a trend whose
impact on the economy lasted well into the 1870s. Predictions
early in the war of a quick Union victory hindered industrial
growth by making entrepreneurs wary of over expanding. As late as
Aug. 1 862, the New York Tribune complained about "our paralyzed
industry."
But wartime statistics, positive or negative, fail to tell
the full story of the Civil Wars impact on Northern
industrialism. Perhaps the primary economic effect of this period
of upheaval was to prepare the U.S. for an intense
industrialization in the decades following 1865. The conflict
helped do away with industry-stifling government regulation;
nationalized the regional market system of antebellum years;
created a generation of war-weary young men motivated by the
acquisitive ethic; reduced the energy-sapping political strife
that had adversely affected industrialism prior to 1861; and
brought to long-term power a political party that favored
business growth. Thus, regardless of the immediacy of its
effects, the war contributed much to the long-term economic
climate that made a reunited America the industrial giant of the
20th century. Source: "The Historical Times Encyclopedia of the Civil
War" Edited by Patricia L. Faust